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Indian markets gave up early gains to end lower on Thursday amid F&O expiry. Today, start of session is likely to be negative as investors react to mixed global cues and domestic macro data. Traders will be concerned as data compiled by the India Meteorological Department (IMD) showed India witnessed the driest August in more than a century as the country received 36% less rainfall than normal in 2023. It added the country has received 10% lower rainfall than normal from June 1 to August 31. Some cautiousness will come as output of eight key infrastructure sectors - known as the core sector - marginally slowed to 8 per cent in July from 8.3 per cent in June. This is due to a low base effect and positive growth in all the eight sectors during the month. Besides, the Centre’s fiscal deficit in the first four months of 2023-24 touched 33.9 per cent of the full-year target. In absolute terms, the fiscal deficit - the gap between expenditure and revenue - was Rs 6.06 lakh crore as of end-July. However, some respite may come later in the day as India’s economy grew at the fastest pace in four quarters -- at 7.8 per cent -- in the April-June period of FY24, aided by a supportive base along with a robust increase in investment. Also, gross value added (GVA) in agriculture and allied activities recorded a growth of 3.5 per cent in the first quarter (Q1) of 2023-24 (FY24), driven by a healthy rabi harvest. This is an increase from the 2.5 per cent growth during the same period in the previous financial year (2022-23, or FY23). Some support may come as Chief Economic Advisor V Anantha Nageswaran said the economy is expected to grow at 6.5 per cent in the current fiscal notwithstanding deficient monsoon rains. Shares of automobile companies will be in focus as they announce the sales figures for the month of August. Textile stocks will be in limelight as the Textiles Ministry decided to extend the deadline for fresh applications under the Production Linked Incentive (PLI) scheme for textiles, covering MMF (manmade fibre) apparel, MMF fabrics and products of technical textiles, by another two months, till October 31 2023.

The US markets ended mostly lower on Thursday after U.S. inflation data matched estimates, underscoring expectations the Federal Reserve could pause its monetary tightening. Asian markets are trading mostly in green on Friday as major Chinese banks cut deposit rates ahead of widely anticipated mortgage-rate cuts.

Back home, Indian equity benchmarks gave up early gains to end lower on Thursday, with Sensex and Nifty falling over 250 and 90 points, respectively, succumbing to the selling pressure exerted by Oil & Gas and Utilities stocks. Indices started in green as traders got support after Finance Minister Nirmala Sitharaman said Indian inflation will remain steady in coming months, despite short-term rises in the prices of certain food items. Market participants were awaiting India’s Q1 Gross Domestic Product (GDP) data to be out later in the day for more directional cues. There are expectations that the country’s economy grew at its fastest pace in a year in the April-June quarter, driven by services and manufacturing. However, soon markets cut their gains and turned lackluster, amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 494.68 crore on August 30. Traders were cautious as the Reserve Bank of India (RBI) in its latest report said that listed private non-financial companies’ sales growth moderated during Q1FY24. As per the data, sales growth (y-o-y) of listed private non-financial companies moderated to 2.1 per cent in Q1FY24 from 8.0 per cent in the previous quarter and 41.0 per cent a year ago. In the second half, markets added more losses, despite positive cues from European markets. Sentiments remained cautious as CareEdge Ratings in its latest report has said the India’s rural demand is vulnerable and could be further impacted by the ‘dual blows’ of lower income and high food inflation owing to an erratic monsoon. Meanwhile, emphasizing digital capability upgradation of Regional Rural Banks (RRBs) by November 1, 2023, Union Finance Minister Nirmala Sitharaman has said that banks should map RRBs with MSME clusters and put greater thrust on increasing network of rural branches in cluster areas identified by the Ministry of Micro, Small and Medium Enterprises. Finally, the BSE Sensex fell 255.84 points or 0.39% to 64,831.41 and the CNX Nifty was down by 93.65 points or 0.48% to 19,253.80.

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